Lowering development fees can make a difference in the housing market by putting more houses within reach of buyers, said Alyssa Ismail, president of the Windsor-Essex County Association of Realtors (WECAR). Her organization has heard from first-time home buyers, seniors looking to downsize, and even renters, saying the cost of having a home is just too expensive. Lower development charges could create more affordability, according to Ismail.
Impact of Reducing Development Charges
“Having those development charges reduced significantly … really makes a difference to the bottom line for these people who are trying to get into the market, or those who are already in the market who are looking to pivot in a different direction,” she said. Ismail, who was born in LaSalle but now lives in Kingsville, was elected as president of WECAR in May.
Most area municipalities have applied to the $8.8 billion Canada-Ontario Development Charge Reduction Program, vowing to cut those charges by 50 per cent — or in Windsor’s case, 70 per cent — if their applications for infrastructure projects that support new housing development are approved. The fund would pay up to 90 per cent of the forgone development charges for three years. Municipalities must pay 10 per cent of project costs.
Municipal Participation and Concerns
Only Amherstburg chose not to submit an application, citing concerns it could leave local taxpayers exposed to significant financial risk. LaSalle is seeking funding that would allow the town to eliminate development fees over the next three years if applications are successful for the Reaume Road/Sandwich West Parkway expansion and the Ellis Street/Diotte Drive expansion. Leamington has not said whether it submitted an application to the fund, but it did not hold a special meeting on the topic, as several other municipalities did before the June 19 deadline for submitting projects.
Typically in the region, development charges range from just over three per cent to about eight per cent. Kingsville charges up to $20,200 for each single and semi-detached new home, Tecumseh charges up to $36,000, and Windsor charges $45,000. The fees pay for infrastructure for new housing so existing taxpayers aren’t paying for growth. Developers pay them and typically pass along the costs to new homebuyers.
Market Implications
Asked if reducing those charges by 50 per cent would spur housing activity, Ismail said it could price the house appropriately for the market. “If we’re pricing a resale property right now in today’s market, if you’re off by $10,000 or $20,000 you know your showings aren’t happening,” she said. “To have something overpriced on the market, even if it is only by $10,000 or $20,000, you’re seeing significant impact just because we do have more inventory than we’ve had historically in the last few years.”
